The U.S. Senate has voted against new brokerage rules introduced by the Biden administration, which included provisions affecting cryptocurrency transactions. The regulation aimed to invalidate a requirement from the Internal Revenue Service (IRS) that mandated software developers and decentralized finance (DeFi) platforms to collect user data. The Senate’s approval is seen as a critical move toward completely removing this mandate from legal text. However, for the regulation to become official, the House of Representatives must also make a similar decision. The White House has indicated that the bill will progress quickly and reach its final stages soon.
Cancellation of the Regulation and Legislative Process
The rule canceled by the Senate was evaluated under the Congressional Review Act. This law ensures the complete removal of the regulation and treats it as though it never took effect. Now, it is essential for the House of Representatives to reach a comparable conclusion. If the House also approves, the bill will be presented for President Biden’s signature. If signed, the IRS will legally be unable to implement such measures.
Impact on Cryptocurrency Regulations
This development may indicate a shift in the U.S. stance on cryptocurrency regulations. The significant margin by which the bill passed in the Senate suggests a potential consensus among both parties on the issue. Figures like Senator Ted Cruz have emphasized that canceling this regulation is critical for technological innovation. Cruz argued that requiring software developers to share user data would negatively impact the industry.
The canceled IRS regulation directly impacted the DeFi ecosystem. Decentralized finance platforms typically operate without intermediaries and lack mechanisms for collecting user data. Consequently, the regulation faced considerable backlash. Now, lawmakers may adopt an approach to better understand the dynamics of the industry.
The decision taken by the U.S. Senate could facilitate discussions on more comprehensive and balanced regulations in the future. Currently, the primary expectation is that the House of Representatives will also make a similar decision to expedite the process. If finalized, it will become much more challenging for the IRS to introduce similar rules in the future.
